1987 (2) TMI 51 - HC - Income Tax

Summary

Issues involved:
The judgment addresses the following Issues:
1. Deletion of addition of Rs. 50,000 by the Income-tax Appellate Tribunal.
2. Whether the assessee successfully rebutted the evidence in possession of the Department.
3. Tribunal's decision on the existence of unaccounted synthetic sheets in the assessee's stock.
4. Deletion of the addition of Rs. 50,000 by the Tribunal without taking any evidence.

Issue 1:
The year of assessment was 1970-71, with the assessee-firm engaged in the business of manufacturing and selling rubber products. The assessing authority found discrepancies in the assessee's closing stock value, leading to an addition of Rs. 50,000. However, the Appellate Assistant Commissioner and the Tribunal disagreed, stating that the assessee had pledged only ordinary insertion sheets, not synthetic sheets, to obtain a key loan accommodation. The Tribunal upheld the deletion of the addition based on this finding.

Issue 2:
The assessing authority believed that the assessee failed to prove that the declared stock was not synthetic sheets, especially as the synthetic sheets were not reflected in the accounts. The Central Excise Department's communication highlighted discrepancies in the assessee's claims. Despite this, the Appellate Assistant Commissioner and the Tribunal accepted the assessee's explanation, leading to the deletion of the addition.

Issue 3:
The Tribunal's decision was based on the assessee's failure to prove that the pledged articles were not synthetic sheets. The Tribunal noted the lack of evidence contrary to the pledge documents and the conduct of the assessee in disposing of the goods without verification. The Tribunal's reasoning was criticized for being based on conjectures and surmises, leading the High Court to set aside the Tribunal's order and restore the assessing authority's decision.

Issue 4:
The Tribunal's deletion of the addition without taking any additional evidence was deemed incorrect by the High Court. The Court found that the Tribunal had misunderstood the burden of proof under section 69B and had based its decision on conjectures rather than concrete evidence. The High Court, invoking its advisory jurisdiction, overturned the Tribunal's decision and upheld the assessing authority's order.

The High Court ruled in favor of the Revenue on all questions, setting aside the Tribunal's decision and directing the parties to bear their respective costs in the case.